86 400 came out of the blocks with a 2.50 per cent savings rate when it opened up seven weeks ago, but has not been able to sustain its market position.
The neobank has cut the variable interest rate bonus saver rate by 25 basis points to 2.25 per cent, a marker of the difficulty that low rate settings are causing for challenger banks.
The base rate on this deposit account remains at 0.40 per cent, with the bonus rate reduced 25 bps to 1.85 per cent, though this bonus is only paid on balances up to A$100,000.
Licensed in July this year, 86 400 was quick to market with its savings account launched in late August, but the RBA's low, low cash rate settings is testing the optimism in its deposit pricing seven weeks ago.
In May, the bank's CEO Robert Bell told Banking Day: "We'll be very competitive on rates and very competitive on fees as you'd expect."
This rate reset may also be a function of sensitive, maybe soon to be final, negotiations over the capital raising needed to fund the growth aspirations of 86 400, a start-up bank for now largely supported by the customer-owned banking sector.
Directly funded by the mutual sector's payments enabler Cuscal, the burn rate at 86 400 is soaking up its owner's capital.
In its annual report, Cuscal put the operating expenses for 86 400 at $15.3 million in 2019, a bit more than double those in 2018, the first year of the build.
Cuscal put the post-tax loss on 86 400 in FY19 at $10.9 million, following a loss of $5 million in 2018.
Cuscal said it "holds an investment of $30.9 million in 86 400 Holdings Pty Ltd at 30 June 2019 with a further $24 million invested on 1 July 2019".
The Cuscal commitment to its challenger brand represents in excess of a quarter of its net assets.
In the overview for the annual report, Cuscal's chair and CEO point out they "did not fund and build 86 400 to own and operate a retail bank.
"Morgan Stanley Australia has been appointed to assist in offering the opportunity to invest directly into 86 400 to support its growth, with the aim of progressively diluting our ownership to 20 percent or less," in line with APRA requirements.
Cuscal and Morgan Stanley have kept tight the state of recent progress toward this goal, a task made a little more doable by setting a more realistic price point on the 86 400 bonus saver account.